Servicing companies handle all of the legal paperwork, reporting, etc and are legally licensed and complaint with regulatory laws for a very minimal fee (typically around $20 - $50 per loan per month).

Additionally, one of the major issues with building here in Minnesota is the Tax and regulatory environment.

Sounds like some GS 7 FEMA guy could have been overstepping to apply the regulatory authority.

To meet our regulatory obligations, we need to verify all of our merchants.

Here in CA, the challenges to development from a regulatory perspective make development undesirable for business people who take risks in exchange for profit. 

Forming a legal entity for your business will have extra filing fees along with the hassle of additional regulatory filings, but those cons are significantly outweighed by the benefits of limited liability.

If you are selling securities, you must either "register" the securities with a regulatory agency (SEC or state securities regulators) or qualify for an exemption from registration. 

I'm sure you can check the rules on the Department of Real Estate site, which is called the Licensing and Regulatory Affairs in MI.

Another challenge (look up Basel III) is there have been additional regulatory burdens placed on banks which has tightened their ability to lend.Ultimately, however, I think getting construction loan approval all comes down to the numbers.

If a claim is made, and the commission finds the contractor to be in violation of the home improvement laws, the commission may pursue regulatory or criminal charges.